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Income Tax Act 2007

Recharacterisation of certain transactions - Interest apportionment on thin capitalisation

FE 8: Measurement dates

You could also call this:

“When and how to measure financial amounts for tax purposes”

If you have an excess debt entity, you need to measure the amount of total group debt, total group assets, and total group non-debt liabilities of your New Zealand group for an income year. You can do this in one of three ways:

  1. You can take the average amount at the end of each day of the income year.
  2. You can take the average amount at the end of each 3-month period in the income year.
  3. You can use the amount at the end of the income year.

If the members of your New Zealand group have different balance dates, you should treat it as if everyone has the same balance date as the New Zealand parent.

For reporting banks, you need to measure both the equity threshold and the net equity of your New Zealand banking group for an income year. You can do this on:

  1. Each day of the income year
  2. The last day of each calendar month of the income year
  3. If you don’t choose either of those, the last day of each quarter of an income year

If the reporting bank changes, the new reporting bank starts its first measurement period on the day after the last measurement date of the old reporting bank.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1516435.

Topics:
Money and consumer rights > Taxes
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Part F Recharacterisation of certain transactions
Interest apportionment on thin capitalisation

FE 8Measurement dates

  1. An excess debt entity must measure the amount of total group debt, total group assets, and total group non-debt liabilities of its New Zealand group for an income year using 1 of the following methods:

  2. the average amount at the end of each day of the income year; or
    1. the average amount at the end of each 3-month period in the income year; or
      1. the amount at the end of the income year.

        1. For the purposes of subsection (1), if the members of the entity’s New Zealand group do not have the same balance date, the alternatives in subsection (1) apply as if the entity has the same balance date as that of the New Zealand parent.

        2. A reporting bank must measure both the equity threshold and the net equity of its New Zealand banking group for an income year on 1 of the following dates:

        3. each day of the income year; or
          1. the last day of each calendar month of the income year; or
            1. if the reporting bank does not choose either paragraph (a) or (b), the last day of each quarter of an income year.

              1. If the identity of the reporting bank changes, the first measurement period for the new reporting bank begins on the day after the last measurement date of the former reporting bank.

              Compare
              Notes
              • Section FE 8(1): amended, on , by section 24(1) (and see section 24(3) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).
              • Section FE 8(4): amended (with effect on 1 April 2008), on (applying for the 2008–09 and later income years) by section 69(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
              • Section FE 8 list of defined terms total group non-debt liabilities: inserted, on , by section 24(2) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).